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WASHINGTON — Mitt Romney says Barack Obama’s policies will consign the United States to an
extended period of sluggish economic growth, at best. The president says his Republican challenger’s
plans will sow the seeds of another mammoth recession. Both are wrong, say some economists.

No matter who wins the election, the economy is on course to enjoy faster growth in the next
four years, they say, as the headwinds that have held it back turn into tailwinds.

Consumers are spending more and saving less after reducing household debt to the lowest since
2003. Home prices are rebounding after falling more than 30 percent from their 2006 highs. And
banks are increasing lending after boosting equity capital by more than $300 billion.

“The die is cast for a much stronger recovery,” said Mark Zandi, chief economist in West
Chester, Pa., for Moody’s Analytics Inc. He sees growth this year and next at about 2 percent
before doubling to around 4 percent in 2014 and 2015 as consumption, construction and hiring all
pick up.

The big proviso, according to Zandi and Yale University professor Ray Fair, is how the
president-elect tackles shrinking the $1.1 trillion federal-budget deficit. The Congressional
Budget Office has warned that the United States will suffer a recession if more than $600 billion
in scheduled government-spending reductions and tax increases take effect next year.

“There are a lot of things that are positive going forward for the economy,” Fair said. “
Hopefully, we can get a handle on the deficit” without dragging down growth too much.

While concern about the threatened fiscal squeeze might hit gross domestic product this quarter
and next, the expansion should pick up strength by the middle of 2013, said Eric Green, a fund
manager at Penn Capital Management Co. GDP “will surprise to the upside,” said Green, whose firm
manages $7.2 billion. “We could grow at a 3 to 4 percent rate over the next couple of years.”

Hiring increased more than forecast in October as employers looked past slowing global growth
and political gridlock at home. In the last jobs report before Tuesday’s election, the Labor
Department said a net 171,000 workers were added to payrolls.

Shares of manufacturers, materials producers and energy and technology companies should rise as
the expansion gains speed, Green said. More “defensive” stocks that aren’t as affected by rising
demand, such as real-estate investment trusts, health-care providers and consumer staples, won’t
perform as well. The Standard & Poor’s 500 Index is up about 12 percent this year.

The U.S. also should benefit next year from a rebound in the rest of the world, according to
Green.

Chinese manufacturing expanded in October for the first time in three months, according to a
purchasing managers’ index compiled by the government.

While manufacturing in the eurozone continues to contract, the region “can’t be in a recession
forever,” said Allen Sinai, chief executive officer of Decision Economics Inc. in New York.
Economists surveyed by Bloomberg see the 17-nation group expanding 0.2 percent next year and 1.2
percent in 2014.

U.S. growth will pick up only gradually during the next few years, to a little more than 3
percent in 2015, held back by an “albatross” of deficits and debt, Sinai said.

Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., is more
downbeat, emphasizing the structural challenges the U.S. faces.

“The prospect is for 2 percent growth,” said El-Erian, whose Newport Beach, Calif.-based company
manages more than $1.9 trillion in assets. “The downside risks are larger than the upside
risks."

He argues that policymakers must tackle such “deep-seated problems” as elevated youth
joblessness and long-term unemployment and a broken housing-finance system to enable the U.S. to
grow faster. And while the president-elect will face an economy in much better shape than four
years ago, he and the Federal Reserve will have less leeway to support expansion by employing
fiscal and monetary policies, as they have already been loosened considerably, El-Erian said.

Households seem increasingly inclined to side with the optimists, preferring to see the economic
glass as half-full rather than half-empty. Consumer confidence climbed in October to a more than
four-year high as Americans took comfort from an improving job market, according to figures from
the New York-based Conference Board.

Adam and Allyson Straight are among those looking ahead to more prosperous times. Adam, a
35-year-old official at the Georgia Dome in Atlanta, and his 27-year-old wife bought a $227,000
three-bedroom house in Roswell, Ga., on Oct. 26 after renting for the past 10 months. They moved in
the following weekend and spent $2,500 on new living-room and dining-room furniture.

“I am optimistic,” said Allyson, a civil attorney. The economy “seems to be moving in a better
direction.”

Pent-up demand will drive the expansion forward in the next few years, said Peter Hooper, chief
economist at Deutsche Bank Securities in New York. Households that put off purchases during the
recession and its aftermath are starting to buy amid rising optimism about their prospects.

Retail sales jumped 1.1 percent in September as Americans snapped up goods, according to
Commerce Department data. The gain followed a 1.2 percent increase in August, the best back-to-back
showing since late 2010.